The Issue The issue in this case is whether Section 320.642(2)(a), Florida Statutes, permits the relocation by Petitioner General Motors Corporation (GM) of the dealership of Petitioner Buddy Foster Chevrolet, Inc. (Foster), from its present location to a new proposed location for the sale of certain line-makes of Chevrolet vehicles. In order to make that determination, the question arises as to whether Respondent Roger Whitley Chevrolet, Inc. (University), and Respondent Gordon Stewart Chevrolet, Inc. (Stewart), are already providing adequate representation for sale of the subject Chevrolet vehicles in the community or territory of the proposed Foster relocation point.
Findings Of Fact Parties GM is a “licensee” and “manufacturer” as defined by Sections 320.60(8) and (9), Florida Statutes. Foster, Stewart, and University are “motor vehicle dealers” as defined by Section 320.60(11)(a)(1), Florida Statutes. Notice and Standing On October 3, 2003, notice of GM’s intent to permit the relocation of Foster (the Proposed Relocation) from its current location at 36822 Highway 54 West, Zephyrhills, Florida (Existing Location) to a proposed location at Interstate 75 and State Road 56 in the Wesley Chapel Area (Relocation Site) was published in the Florida Administrative Weekly, Volume 29, Number 40, page 3964. Both the Existing Location and the Relocation Site are in Pasco County, Florida. Stewart is an existing franchised Chevrolet dealer who timely protested the proposed relocation of Foster. Stewart has standing to maintain that protest. University is an existing franchised Chevrolet dealer. After Roger Whitely Chevrolet, Inc., timely protested the proposed relocation of Foster, University purchased the stock of Roger Whitley Chevrolet, Inc., and changed the name of the dealership to University Chevrolet. University acquired the rights of Roger Whitley Chevrolet, Inc., to protest the proposed relocation, and has standing to maintain that protest. The Community or Territory and Recent Modifications to the Chevrolet Dealer Network The Community or Territory (Comm/Terr) relevant to this proceeding is the area defined by GM as the Tampa Multiple Dealer Area (Tampa MDA) plus the Wesley Chapel and Plant City markets.2/ There are currently four Chevrolet dealers in the Tampa MDA: Stewart, University, Ferman Chevrolet, and Autoway Chevrolet. There are currently five Chevrolet dealers in the Comm/Terr, the four Tampa MDA dealers plus Bill Heard Chevrolet (Bill Heard) in Plant City. Foster is not currently in the Tampa MDA or the Comm/Terr. The area currently assigned to Foster as its Area of Primary Responsibility pursuant to its GM franchise agreement is referred to as a Single Dealer Area (SDA), meaning that Foster is the only dealer assigned to the APR. The Proposed Relocation would add Foster as a fifth Chevrolet dealer in the Tampa MDA and a sixth Chevrolet dealer in the Comm/Terr. The Comm/Terr currently contains four full line Ford dealerships and one light-truck only Ford dealership. All other line-makes currently have four or fewer dealers in the Comm/Terr. In 2004 there were two significant changes in the Chevrolet dealer network within the Comm/Terr. In May of 2004, Bill Heard relocated to a new facility adjacent to Interstate 4, placing Bill Heard in a better position to sell into the Tampa MDA along with the expectation of both a significant increase in Bill Heard’s new vehicle sales and Chevrolet’s level of performance in the Comm/Terr.3/ In June of 2004 University purchased Roger Whitley Chevrolet, changed managers, expanded business hours, and tripled advertising expenditures. The recent ownership change is expected to result in increased new vehicle sales from the dealership and an increased level of Chevrolet performance in the Comm/Terr.4/ Proposed Relocation In the Fall of 2002, the owner of Foster, Harry M. Foster, requested that GM grant him an additional Chevrolet location in the Wesley Chapel, Florida, area. Subsequently, GM conducted a market study to determine whether it was appropriate to add a Chevrolet location in Wesley Chapel. Marvin Beaupre was assigned the task of analyzing the Wesley Chapel market and determining whether an additional Chevrolet location was justified. Beaupre’s subsequent market study revealed that Chevrolet had historically received an adequate level of representation from existing dealers in the area currently assigned to Foster in its GM franchise agreement (the dealership’s APR). Beaupre concluded that although there appeared to be a deficiency in Chevrolet performance in the Tampa MDA, the deficiency was not significant enough to justify the addition of a new dealership in Wesley Chapel. When Foster learned of GM’s decision not to add a new Chevrolet dealership in Wesley Chapel, he requested the opportunity to relocate his existing dealership in Zephyrhills, Florida, to the Wesley Chapel area. GM agreed to allow the Proposed Relocation on the basis of growth in the Wesley Chapel and New Tampa area. Currently, Foster is located in approximately the center of its APR/SDA. The Proposed Relocation would place Foster in the furthest southwestern portion of its APR/SDA, with a location immediately adjacent to the AGSSAs assigned to Stewart and University. As a result of the Proposed Relocation and the addition of Foster to the Tampa MDA, Stewart and University would be assigned new AGSSAs considerably smaller (in both geography and population) than their existing AGSSAs. The new AGSSA that would be assigned to Foster as a result of the Proposed Relocation would be larger in terms of population and sale opportunity than its existing APR/SDA. Those portions of the current Foster APR/SDA which would not be included in the AGSSA assigned to Foster after the relocation would be reassigned to the dealership immediately to the north of Foster, Dade City Chevrolet, increasing the geography, population, and sale opportunity of the Dade City Chevrolet APR/SDA. Harry M. Foster owns both Foster and Dade City Chevrolet. Is Current Representation Adequate As a result of the Proposed Relocation, certain consumers would suffer a negative impact, although some consumers would have more convenient access to a Chevrolet dealer. Consumers in the new AGSSA that would be assigned to Foster would experience an average decrease in distance to a Chevrolet dealer of 3.7 straight-line miles.5/ Contrarily, consumers in the existing APR/SDA assigned to Foster would experience an average increase in distance to a Chevrolet dealer of 4.0 driving miles, and those same consumers would experience an average increase in distance to Foster of 6.0 driving miles. Throughout the Comm/Terr, the Proposed Relocation would only result in an average decrease in the distance from a consumer to a Chevrolet dealer of .4 straight-line miles. Other than convenience, there is a second factor arising from the Proposed Relocation that could impact consumers. There will be a greater number of consumers located between Foster and Dade City Chevrolet. Consumers previously located between Foster and Stewart or University (with easier access to cross-shop between Foster and Stewart or University) would be located between Foster and Dade City Chevrolet after the relocation with convenience lying in the cross-shop between Foster and Dade City Chevrolet. Since both Foster and Dade City Chevrolet are owned and operated by the same individual, it is possible that the Proposed Relocation could result in a decrease of competition among Chevrolet dealers as it relates to some consumers, a negative impact on those consumers and on the public interest. In terms of competition between two Chevrolet dealers, convenience to the customer is the most critical factor. The Proposed Relocation would move Foster significantly closer to both Stewart and University, and to consumers served by those dealerships. In terms of straight-line distance, the Proposed Relocation would be a move of 10.7 miles. Currently, Foster is 20 straight-line miles from Stewart and 19.6 straight-line miles from University. After the relocation, Foster would be 9.7 straight-line miles from Gordon Stewart and 10.8 straight-line miles from its old location. In terms of driving time, Foster is currently 37.7 minutes from Stewart and 33.5 minutes from University. After the relocation, Foster would be 18.4 minutes from Stewart and 14.1 minutes from University. As a result of the Proposed Relocation, Foster would be significantly closer to many consumers now closer to either Stewart or University. Additionally, Foster would be significantly closer (both in straight-line distance and drive time) to a large percentage of the existing new vehicle, used vehicle, and service customers of both Stewart and University. In 2002 and 2003, Stewart and University made 40% of the sales registered in the area to which Foster would gain a convenience advantage as a result of the Proposed Relocation. There exists a statistical correlation between the size of a dealer’s AGSSA and the number of new vehicle sales made by the dealer. As the size of a dealer’s AGSSA decreases the number of sales made by the dealer will typically decrease. In this instance, based on the relative change that would result in the increased convenience of Foster to those consumers who currently find it more convenient to shop at Stewart or University and the decrease in the area in which Stewart or University would have a competitive advantage based on convenience (i.e. a decrease in each dealer’s AGSSA), a reasonable estimate of impact to Stewart from the Proposed Relocation is a loss of approximately 17% of new vehicle sales and 15% of used vehicle sales and service business.6/ A reasonable estimate of impact to University from the Proposed Relocation is a loss of approximately 16% of new vehicle sales and 15% of used vehicle sales and service business.7/ Based on Stewart’s performance in 2003, the financial losses incurred by Stewart as a result of the Proposed Relocation would be in the range of $600,000 per year. Based on the pro forma financial statement submitted to GM by University at the time of its purchase of Roger Whitley Chevrolet, Inc., the financial losses incurred by University as a result of the Proposed Relocation would be in the range of $750,000 per year.8/ The Proposed Relocation could have a significant short-term negative impact on existing dealers, including a significant financial impact on Stewart and University. GM’s expert classified short-term as up to a year, and indicated that after that period the market could adjust and existing dealers re-establish their pre-relocation level of performance. However, that dealership growth would, at least in part, be a result of general growth in the market and does not indicate that existing dealers will regain their pre-relocation level of performance in an economic sense (because they have been denied the opportunity to capture the growth that would have resulted from general market expansion). Significantly, the financial loss expected for both Stewart and University could, because of the “turn and earn” system employed by GM to determine vehicle allocation, result in a circumstance known in the automobile industry as a “death spiral,” where the dealer cannot earn vehicles because of a slow turn rate and cannot turn vehicles because it has not earned them. As the name implies, the “death spiral” results in a dealer either going out of business or having to sell the dealership. Impact on GM GM would not significantly benefit from the Proposed Relocation. Although it is clear that there has been recent growth in the Wesley Chapel area and that other manufacturers have, or plan to, establish locations in that general area, the evidence establishes that existing Chevrolet dealers are actively pursuing sales and service business in the Wesley Chapel area (including producing a significant amount of advertising for Chevrolet products) and, as noted above, that Chevrolet currently has an adequate level of convenience to customers in Wesley Chapel. The evidence does not establish that GM will enjoy increased sales or overall increased customer convenience as a result of the Proposed Relocation.9/ Existing Chevrolet dealers have historically provided an adequate level of customer satisfaction performance and have adequate facilities to serve the Comm/Terr.10/ Short-term competition between Chevrolet dealers for customers in the Comm/Terr could increase after the Proposed Relocation. The likelihood, however, that competing Chevrolet dealers will not be as successful as they have been in the past in making sales into the Wesley Chapel area if Foster is relocated, makes it highly probable that competition among Chevrolet dealers for customers in that area will actually decrease in the long-term. Existing dealers will focus their marketing efforts on areas other than Wesley Chapel. Investment of Existing Dealers The owners of Stewart and University have invested significant dollar amounts to perform their obligations under their respective GM franchise agreements. The owners of Stewart invested approximately $9,000,000 in purchasing land and constructing facilities for the dealership. The owners of University recently purchased the stock of Roger Whitley Chevrolet, Inc., and have an investment of $12,000,000 to $14,000,000 in the dealership. The Proposed Relocation would put the investment of the owners of Stewart and University at significant risk. Market Penetration A line-make’s market penetration is measured by dividing the number of that line-make’s new vehicles registered in a particular area by the total number of competitive new vehicles registered by all line-makes in the same area. In determining whether Chevrolet is currently achieving a reasonably expected level of market penetration in the Comm/Terr a reasonable standard or benchmark must first be established against which Chevrolet’s performance is compared which is neither too high nor too low. Chevrolet’s national average market penetration as a standard against which to judge Chevrolet’s current performance in the Comm/Terr is not reasonable.11/ There are several reasons why use of the national average is not appropriate to test Chevrolet’s current market penetration in the Comm/Terr. First, the national average represents a very large area (the nation), which is demographically very diverse in terms of culture, economy, politics, climate, terrain, etc. The Comm/Terr, or for that matter the State of Florida as a whole, does not share that same level of diversity.12/ Second, most manufacturers have rejected national average as a reasonable standard for evaluating dealer performance. Indeed, GM uses state average when evaluating the performance of its Chevrolet dealers.13/ The deposition testimony of William E.L. Powell, the former Zone Manager responsible for approving network changes such the Proposed Relocation, establishes that, although national average is considered, state average is the focus of GM’s analysis of whether a particular line-make as a whole is being under represented in a market. Third, the national average includes areas that are heavily influenced by special purchasing plans provided to GM employees, those employees’ family members, and employees of GM suppliers. Those plans provide participants an incentive to purchase GM products by establishing a standard price (only slightly above dealer cost) at which the participant may purchase a vehicle from any dealer in the country. It is telling that those states in which Chevrolet’s average penetration meets or exceeds what is expected based on national average are almost exclusively found in the “heartland” of America. Those states, which are the traditional home to manufacturing in this country, are also the states in which Chevrolet’s penetration performance is most likely to be positively influenced by GM’s employee and supplier purchase plans. Use by GM of the national average as a standard to judge Chevrolet’s performance in the Comm/Terr overlooks the fact that the only Florida MDA in which Chevrolet’s market penetration meets or exceeds what is expected based on national average is Pensacola, Florida. In all of the 10 other Florida MDAs, Chevrolet falls short of the expected penetration based on national average. The markets in Florida where Chevrolet does achieve the expected level of market penetration based on national average are significantly different from the Comm/Terr which is the subject of this proceeding. They tend to be more rural in location than this Comm/Terr and significantly smaller in terms of automobile retail activity.14/ In these more rural areas, the market penetration of what are traditionally considered domestic brands, such as Chevrolet, tends to be higher than in urban areas because throughout the rural areas there is a lack of representation of what are traditionally considered import brands. The appropriate standard against which to measure Chevrolet’s performance in the Comm/Terr, when judging the performance of a line-make in a Florida market, is to use that line-make’s performance in the State of Florida as a whole as the standard. Although there exist differences in the demographic, geographic, economic, and political make-up of the various communities throughout the State, Florida as a whole is much more representative of the Comm/Terr than is the Nation as a whole.15/ Chevrolet’s performance in the Comm/Terr has historically been either above or essentially at the expected level of penetration based on Florida average. In 2001, Chevrolet performed at 102.8% of the expected level. In 2002, Chevrolet performed at 99.6% of the expected level, and, in 2003, at 99% of the expected level. In those years where Chevrolet was below the expected level, the shortfall was insignificant (32 out of 7,292 expected units in 2002, and 80 out of 7,517 units in 2003).16/ More importantly, the statistics presented regarding Chevrolet’s performance during previous years do not reflect the performance of the currently existing dealer network.17/ Rather, if a reasonable level of increased performance is attributed to Bill Heard as a result of that dealership’s relocation in May of 2004 (note 3 supra), it is unquestionable that Chevrolet does now achieve its expected level of penetration in the Comm/Terr based on Florida average. As for the AGSSA that would be assigned to Foster if it relocated, Chevrolet’s level of penetration in that market has historically been slightly under its expected penetration based on Florida average. In 2001, Chevrolet performed at 94.3% of the expected level, in 2002 Chevrolet performed at 91.1% of the expected level, and in 2003 Chevrolet performed at 91.9% of the expected level. Again, the shortfall in terms of number of retail units sold was not substantial (50 out of 883 expected in 2001; 82 out of 916 expected in 2002; and 83 out of 1,018 expected in 2003). As with the Comm/Terr, if the impact of changes in the dealer network, which occurred in 2004, are considered (notes 3 & 4 supra), the shortfall in performance within the relocated Foster AGSSA disappears or becomes statistically insignificant. Thus, under the currently existing dealer network, Chevrolet’s present penetration in the relocated Foster AGSSA does not fall significantly below the Florida average. The minimal shortfall that may exist in the relocated Foster AGSSA relates to the fact that Chevrolet products do not perform as well in higher income markets as in markets with more modest incomes. This phenomenon is a factor beyond the control of the dealers within the Comm/Terr. Because Wesley Chapel is a higher income area, Chevrolet cannot be expected to perform as well in that market as in the Comm/Terr as a whole. GM Denial Of Growth Opportunity to Existing Dealers The owners of Stewart established the dealership in 1991. The dealership was established as an additional dealership location granted by GM, and GM established the exact location of the dealership. Prior to agreeing to open the dealership, Gordon Stewart, the principal owner, expressed to GM his concern that the dealership was to be located in a sparsely populated area north of Tampa. In response to Mr. Stewart’s concerns, GM reassured him that it had conducted a market study and determined that the location they had chosen was the optimal location for the dealership based on future market growth GM reasonably expected to occur north of Tampa. Based on GM’s assurances, Mr. Stewart and his partner, Arthur Smith, made considerable investment in constructing and equipping the dealership, with what they believed to be a reasonable expectation of selling approximately 2,500 new vehicles each year. The growth, however, that GM expected north of Tampa did not materialize, except for in the Wesley Chapel area. Nor has Stewart reached its projection of 2,500 new units sold per year, achieving instead only half as many sales. Because of the number of competitive dealers located south of Stewart, the dealership has had to rely on growth in the Wesley Chapel area as the basis for a significant portion of its profits and for future growth potential of the dealership, particularly as areas immediately surrounding the dealership have begun to decline. As discussed above, the Proposed Relocation would have a significant negative financial impact on Stewart and University. Additionally, the Proposed Relocation would deny Stewart the opportunity to serve the North Tampa market, which was the original purpose for establishing the dealership. GM’s approval of the Proposed Relocation would deny Stewart the reasonable opportunity for expansion and growth of its business that GM indicated would be available when Mr. Stewart and Mr. Smith agreed to invest in the dealership. Coercion of Existing Dealers There have been no efforts by GM to coerce existing dealers to consent to the proposed relocation. Distance and Accessibility Distance and travel time, between Foster and Stewart and Foster and University would be reduced by half if the Proposed Relocation were to occur. There, however, is no indication that consumers in the Comm/Terr do not already have easy access to existing Chevrolet dealers in the Comm/Terr. At present, Chevrolet currently enjoys the second lowest average distance to consumer measurement of all the line-makes represented in the Comm/Terr. The Proposed Relocation would not add any significant improvement to the ability of customers in the Comm/Terr to access a Chevrolet dealer. Benefits to Consumers Obtained by Geographic or Demographic Changes Rather than providing benefits to consumers that are not likely to be obtained by geographic or demographic changes in the Comm/Terr, the Proposed Relocation may result in a negative impact to consumers. Protesting Dealers And Dealer Agreements Compliance Stewart and University are in compliance with the terms of their dealer agreements. Adequacy of Interbrand and Intrabrand Competition and Consumer Care The high level of market penetration being achieved by Chevrolet in the Comm/Terr and the increase in that market penetration that will occur as a result of the recent dealer network changes, indicates that there is adequate intrabrand and interbrand competition in the Comm/Terr. (notes 3 & 4 supra.) As previously noted, Chevrolet’s level of convenient consumer care is among the best in the Comm/Terr. As for existing dealership facilities, the existing Chevrolet dealers in the Comm/Terr have facilities which are adequate to service the market. Relocation Justification Based on Economic and Marketing Conditions There are no economic or marketing conditions to justify the Proposed Relocation. The recent changes in the dealer network (the Bill Heard relocation and the change of ownership at University) have made this even more emphatic. Volume of Existing Dealers Registrations and Service Business The existing Chevrolet dealers are transacting a significant level of service and sales business in the Comm/Terr. In terms of retail sales volume, in 2003 Chevrolet ranked second in passenger vehicle sales and second in light- truck sales registered within the Comm/Terr.
Recommendation Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence of record, and the candor and demeanor of the witnesses, it is RECOMMENDED: That a final order be entered determining that Petitioner, General Motors Corporation, has failed to satisfy its burden of establishing that existing Chevrolet dealers are not currently providing adequate representation to the Chevrolet line-make within the community or territory of the proposed relocation, and denying the application to relocate Foster from its current location to the proposed location at I-75 and State Road 56. DONE AND ENTERED this 16th day of February, 2005 in Tallahassee, Leon County, Florida. S DON W. DAVIS Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 16th day of February, 2005.
The Issue Whether the Department of Revenue's denial of Petitioner's application for a Florida fuel license should be upheld.
Findings Of Fact Based on the oral and documentary evidence presented at the final hearing and on the entire record of this proceeding, the following findings of fact are made: On or about May 22, 2001, Armando Yzaguirre submitted to the Department a completed Florida Fuel Tax Application, Form DR-156, seeking licensure as a private carrier and wholesaler on behalf of Yzaguirre Oil Company, Inc. ("Yzaguirre Oil"). The application listed Mr. Yzaguirre as the president and sole stockholder of Yzaguirre Oil. Form DR-156 requests information about the applicant business and its principals, including a list of 33 questions requiring a "yes" or "no" answer from the applicant. Question number 33 asks: Have you or other owners, officers, directors, or stockholders with a controlling interest, been convicted of, or entered a plea of guilty or nolo contendere to, a felony committed against the laws of any state or the United States? Mr. Yzaguirre's sworn answer to Question number 33 was "yes." Mr. Yzaguirre provided the Department with no elucidation as to the circumstances of his admitted felony conviction. On or about June 22, 2001, Maria Yzaguirre, the wife of Armando Yzaguirre, submitted to the Department a completed Florida Fuel Tax Application, Form DR-156, seeking licensure as a private carrier and wholesaler on behalf of My Oil Company, Inc. ("My Oil"). The application listed Mrs. Yzaguirre as the president and sole stockholder of My Oil. On June 29, 2001, Mrs. Yzaguirre filed with the Department articles of incorporation for My Oil. On July 5, 2001, Mrs. Yzaguirre filed these articles of incorporation with the Secretary of State to obtain registration as a Florida domiciled corporation. Aaron Hood, a revenue specialist in the Department's motor fuel registration unit, was assigned to process both the Yzaguirre Oil application and the My Oil application. Mr. Hood conducted a standard background investigation of both applicants, securing investigative reports from the Federal Bureau of Investigation and the Florida Department of Law Enforcement on the criminal histories of Armando and Maria Yzaguirre. The reports revealed that Maria Yzaguirre had no criminal record, either of arrest or conviction. The reports revealed a lengthy list of arrests for Armando Yzaguirre. The reports included a 1980 arrest for felony arson of a structure in Collier County, and a 1990 arrest and conviction for marijuana possession in Texas. The reports were inconclusive as to whether the Collier County felony charge resulted in conviction, or whether the Texas conviction was a felony. Having difficulty determining the precise nature of the felony to which Mr. Yzaguirre admitted in his application, Mr. Hood enlisted the aid of Pete Welch, a Department investigator. On January 3, 2002, Mr. Welch reported to Mr. Hood that information received from the Clerk of the Circuit Court of Collier County confirmed that Mr. Yzaguirre had been convicted by a jury of the 1980 felony charge. However, aside from Mr. Welch's e-mail report to Mr. Hood, the Department offered no evidence confirming this felony conviction. Mr. Welch's investigation also obtained details of the Texas marijuana possession charge. In December 1990, Mr. Yzaguirre's plea of nolo contendere to a second-degree felony charge of possession of more than five but not more than 50 pounds of marijuana was accepted by the court. Mr. Yzaguirre's ten-year sentence was suspended in favor of eight years' probation and a $5,000 fine. No evidence was presented to show that Mr. Yzaguirre failed to comply with the terms of probation. Neither was evidence presented that Mr. Yzaguirre has been pardoned or that his civil rights have been restored. At the hearing, Mr. Yzaguirre indicated that he is taking steps to seek restoration of his civil rights. In his review of the Yzaguirre Oil and My Oil applications, Mr. Hood discovered that the companies claimed many of the same assets. Each company listed the same two tanker trucks to be used in transporting fuel. Each company listed 211 New Market Road, East, in Immolakee as its principal business address. Each company claimed exactly $1 million in accounts receivable. The timing of the filings and the common assets led Mr. Hood to suspect that the later My Oil application was submitted under Maria Yzaguirre's name to evade the possible disqualification of the Yzaguirre Oil application because of Mr. Yzaguirre's felony convictions. In short, Mr. Hood suspected that My Oil was a "front" corporation over which Mr. Yzaguirre would exercise control. The common assets also led Mr. Hood to suspect the truthfulness and accuracy of the financial affidavits filed by Maria Yzaguirre on behalf of My Oil. While it investigated the criminal history of Mr. Yzaguirre, the Department also investigated the extent of Mr. Yzaguirre's possible control over My Oil's business activities. Armando B. Yzaguirre is the 25-year-old son of Armando Yzaguirre and the stepson of Maria Yzaguirre. Testimony at the hearing established that Armando B. Yzaguirre completed both license applications and was the driving force behind the creation of both Yzaguirre Oil and My Oil. The elder Armando Yzaguirre's chief business is farming. His tomato and melon operation earns over $1 million per year. To save money on transporting the large amounts of fuel needed for his farming operations, Mr. Yzaguirre purchased two sizable tanker trucks in 2001, a new Peterbilt with a capacity of 9,200 gallons, and a 1998 Ford with a 2,500 gallon capacity. If these trucks were used only for Mr. Yzaguirre's farm, they would sit idle much of the time. This idle capacity gave Armando B. Yzaguirre the idea of going into the fuel transport business, using his father's tankers to deliver fuel to other farms and businesses in the area. Yzaguirre Oil was incorporated to operate as a fuel transport business. The business would be operated entirely by Armando B. Yzaguirre, who was the only member of the family licensed to drive the large tanker truck. The trucks were owned by and licensed to Yzaguirre Oil. Armando B. Yzaguirre was going through a divorce at the time Yzaguirre Oil was established. He was concerned that his wife would have a claim to half of any business he owned, and wished to ensure that ownership of Yzaguirre Oil would remain in his family. Thus, Armando B. Yzaguirre placed all ownership of Yzaguirre Oil in the name of his father, though his father would have no connection with the operation of the company's business. Subsequent to incorporating Yzaguirre Oil, Armando B. Yzaguirre discussed his prospective business with his stepmother, Maria Yzaguirre. Mrs. Yzaguirre was pleased that young Armando was establishing a business for himself. They discussed the future of the six younger Yzaguirre children and ideas for businesses that could be established to eventually be taken over by the children. Ultimately, the younger Armando and Maria Yzaguirre settled on the idea of a convenience store and filling station that could be established on part of a city block in Immolakee that the senior Mr. Yzaguirre already owned. This would be the type of business that the children could learn and work at while they were still in school, then take over after their graduation. This was the genesis of My Oil. Mrs. Yzaguirre contacted a lawyer to draft articles of incorporation and later transferred $100,000 from her personal money market account into a My Oil bank account to provide start-up money. The younger Armando Yzaguirre filled out the fuel license application, using his earlier application for Yzaguirre Oil as a model. As with the earlier application, the younger Armando Yzaguirre kept his name off the corporate documents and the fuel license application to avoid any claim by his soon-to- be ex-wife to the company's assets. He anticipated that My Oil would lease the two tanker trucks from Yzaguirre Oil, and thus listed them on the application as assets of My Oil. At the hearing, Mr. Yzaguirre conceded that he made mistakes on both applications. As noted above, he listed $1 million in accounts receivable for each of the companies. These were actually accounts receivable for his father’s farming operation, and should not have been included as assets for either Yzaguirre Oil or My Oil. Testimony from witnesses for both parties indicated that communications between the Yzaguirres and the Department were poor during the application review process. The Yzaguirres often telephoned Mr. Hood to learn the status of their applications, so often that Mr. Hood felt harassed. From their standpoint, the Yzaguirres could not understand why the applications were taking months to process, and felt that Mr. Hood was continually placing obstacles in their path and avoiding their queries. As noted above, early in the review process, the Department began to suspect that My Oil was a front for Yzaguirre Oil. At the hearing, however, the Department was unable to establish that the Yzaguirres knew of the likely rejection of the Yzaguirre Oil application in the month before they filed the My Oil application. Due to illness, Mr. Hood was unable to testify at the hearing as to his conversations with the Yzaguirres. For their part, the Yzaguirres adamantly denied any prior knowledge that the elder Mr. Yzaguirre’s criminal record would disqualify his application. Armando B. Yzaguirre, who was the Yzaguirres' point person in dealing with the Department, testified that no one at the Department made him aware that his father's criminal history was a problem until December 2001. The Yzaguirres also denied that the elder Mr. Yzaguirre would have any connection with the operation of My Oil. The Department pointed to several alleged discrepancies in the My Oil application as grounds for its suspicion that the company was a "front" for Yzaguirre Oil. First, the My Oil application, filed June 20, 2001, lists a corporate asset of $100,000 in cash on deposit at an unnamed bank, when in fact the cash was not deposited in a My Oil account at Florida Community Bank until September 10, 2001. Second, the My Oil application lists the two tanker trucks as corporate assets as of the date of application, when in fact the trucks were titled in the name of Yzaguirre Oil and the anticipated lease arrangement had yet to be consummated. Third, the My Oil application claimed the property at 211 New Market Road, East, as a corporate asset as of the date of application, when in fact the property was titled in the name of the elder Mr. Yzaguirre. Fourth, the My Oil application listed $1 million in accounts receivable as a corporate asset. As noted above, Armando B. Yzaguirre admitted at the hearing that these receivables were from his father's farming operation and should not have been listed on the application as assets of My Oil. Armando B. Yzaguirre plausibly explained that My Oil anticipated leasing the trucks, but that there was no reason to spend the money to finalize that arrangement until the fuel license was obtained and My Oil could actually commence operations. Similarly, Mrs. Yzaguirre clearly had on hand the $100,000 in cash claimed as a My Oil asset, and the timing of her actual transfer of that money into a My Oil account would not alone constitute cause for suspicion, given that My Oil had yet to commence operations when the application was filed. Armando B. Yzaguirre also convincingly explained that leasing the tanker trucks from his father's company would not give Yzaguirre Oil effective control over My Oil's business. The younger Mr. Yzaguirre contemplated that the lease agreement would be an arms-length arrangement between the two companies. If the companies could not arrive at a mutually satisfactory lease agreement, or if the lease agreement should later fall through, My Oil could lease trucks from another company and continue doing business. However, no witness for My Oil offered a satisfactory explanation as to how the elder Mr. Yzaguirre's ownership of the real property would not give him some degree of control over My Oil's business. At the time of the hearing, title to the property at 211 New Market Road, East, was in the name of Armando Yzaguirre. A warranty deed for at least a portion of the property, executed by the prior owners on July 16, 1998, was in the name of Armando Yzaguirre. The Yzaguirres did not explain whether My Oil would purchase or lease the property from the elder Mr. Yzaguirre. The structure of the arrangement is critical to the issue of the elder Mr. Yzaguirre's control over My Oil. Substitutes for the tanker trucks could be obtained in short order with little or no disruption of My Oil's business. However, the physical location of the convenience store and filling station could not be changed so readily, and the elder Mr. Yzaguirre's position as owner of that property could give him great leverage over the operation of the business. The Department also raised the issue of the undisclosed participation of Armando B. Yzaguirre in the business affairs of My Oil. The testimony of Maria Yzaguirre and of her stepson strongly indicated that the younger Mr. Yzaguirre would have substantial control over the business activities of My Oil. However, because Armando B. Yzaguirre's identity was not disclosed on My Oil's application, the Department had no opportunity to conduct a review of his background and character to determine whether he met the standard set by Section 206.026, Florida Statutes. In summary, there was no direct evidence that the Yzaguirres deliberately attempted to deceive the Department or that My Oil was established as a front to obtain licensure for the presumptively ineligible Yzaguirre Oil. The evidence did establish that Armando Yzaguirre has been convicted of at least one felony, and that his ownership of the real property on which My Oil would conduct business could provide him with control of My Oil's business activities. The evidence further established that Armando B. Yzaguirre will have control over My Oil's business, and that the Department should have had the opportunity to conduct a background review to determine his fitness under Section 206.026, Florida Statutes. In conclusion, the facts established at the hearing support the Department's denial of My Oil's application as filed, but also establish that such denial should be without prejudice to My Oil's ability to file a subsequent application curing the defects of its initial application.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Revenue enter a final order denying the application of My Oil Company, Inc. for a Florida fuel license, without prejudice to the ability of My Oil Company, Inc., to file a new application curing the defects addressed in this Recommended Order. DONE AND ENTERED this 3rd day of July, 2002, in Tallahassee, Leon County, Florida. LAWRENCE P. STEVENSON Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 3rd day of July, 2002. COPIES FURNISHED: E. Raymond Shope, II, Esquire 1404 Goodlette Road, North Naples, Florida 34102 Robert F. Langford, Jr., Esquire Office of the Attorney General The Capitol-Tax Section Tallahassee, Florida 32399-1050 Bruce Hoffmann, General Counsel Department of Revenue 204 Carlton Building Tallahassee, Florida 32399-0100 James Zingale, Executive Director Department of Revenue 104 Carlton Building Tallahassee, Florida 32399-0100
The Issue There are three legal issues which remain for determination: (1) Whether Florida Petroleum has standing in this case; (2) Whether proposed rule 62-770.220(3)(b), requiring constructive notice to residents or business tenants of real property into which the temporary point of compliance is allowed to extend is an invalid exercise of delegated legislative authority within the meaning of Section 120.52(8)(c), Florida Statutes; and (3) Whether proposed rule 62-770.220(4), requiring additional constructive notice of the status of site rehabilitation is an invalid exercise of delegated legislative authority within the meaning of Section 120.52(8)(c), Florida Statutes.i
Findings Of Fact On December 23, 2004, the Department published a Notice of Proposed Rulemaking regarding amendments to Florida Administrative Code Chapter 62-770. In particular, proposed rule 62-770.220(3)(b) and (4), provides: Subsequent Notice of Contamination Beyond Source Property Boundaries for Establishment of a Temporary Point of Compliance (TPOC) - Prior to the Department authorizing a temporary extension of the point of compliance beyond the boundary of the source property (i.e., the location from which the contamination originates) in conjunction with Natural Attenuation Monitoring pursuant to Rule 62-770.690, F.A.C., or Active Remediation pursuant to Rule 62-770.700, F.A.C., the PRSP shall provide the following notices: * * * (b) Constructive notice to residents [if different from the real property owner(s) notified pursuant to paragraph 62- 770.220(3)(a), F.A.C.] and business tenants of any real property into which the point of compliance is allowed to extend. Such constructive notice, which shall include the same information as required in the actual notice, shall be provided by complying with the following: * * * Status Update 5-Year Notice - When utilizing a TPOC beyond the boundary of the source property to facilitate natural attenuation monitoring or active remediation, an additional notice concerning the status of the site rehabilitation shall be similarly provided every five years to [the classes of] those persons who received notice pursuant to subsection 62-770.220(3), F.A.C., unless in the intervening time, such persons have been informed that the contamination no longer affects the property into which the point of compliance was allowed to extend. * * * (The language in brackets was added pursuant to the Department's Notice of Change and "those" was deleted.) The proposed rule implements Section 376.3071, Florida Statutes. The specific authority for the proposed rule is Sections 376.303 and 376.3071, Florida Statutes. On February 2, 2005, the Environmental Regulation Commission held a public hearing on the proposed rules and approved the proposed rules with certain amendments. On February 14, 2005, Florida Petroleum filed a Petition for Determination of Invalidity of Proposed Rule (Petition) challenging the validity of proposed amendments to proposed rule 62-770.220(3)(b) and (4). The Petition was filed pursuant to Section 120.56(1) and (2), Florida Statutes, and in each instance, Florida Petroleum alleges that the proposed rule violates Section 120.52(8)(c), Florida Statutes. On March 4, 2005, the Department published a Notice of Change regarding the above-referenced Notice of Proposed Rulemaking. With respect to the pending proceeding, the Notice of Change reflects revisions to language of proposed rule 62- 770.220(4), which are not subject to challenge. See Finding of Fact 1. On May 16, 2005, without objection, official recognition was taken of the Department's Notice of Proposed Rulemaking and Notice of Change. Florida Petroleum is a Florida voluntary, non-profit trade association, which comprise, in part, approximately 194 Marketer Members who own and/or operate petroleum storage system facilities in Florida. Florida Petroleum’s purposes include providing representation on behalf of its members in legislative and regulatory matters before the Florida legislature and agencies. Florida Petroleum routinely represents its members in rule development proceeding and other regulatory matters before the Department of Environmental Protection, Department of Revenue, and Department of Agriculture and Consumer Services. Florida Petroleum’s By-Laws state that its purposes include advancing the business concerns of its members, pooling the energy and resources of its members, and communicating with elected officials at the national, state, and local levels of government. Towards those ends, Florida Petroleum has represented it members before the Florida Legislature in matters relating to the regulation of petroleum facilities under Chapter 376, Florida Statutes, and has appeared before the Department in rulemaking proceedings involving the regulation of petroleum cleanups, and the various state restoration funding assistance programs. The subject matter of the rule at issue is within the general scope of interest and activity of Florida Petroleum, in particular, its marketer members, who own or operate facilities that store petroleum products for consumption, use, or sale. Florida Petroleum submitted oral and written comments, recommendations, objections, and proposed amendments to the Department and the Environmental Regulation Commission in connection with the rules at issue in this case. A substantial number of Florida Petroleum marketer members are "persons responsible" for assessment and remediation of one or more petroleum-contaminated sites. Florida Administrative Code Chapter 62-770, governs the remediation of petroleum-contaminated sites. A substantial number of Florida Petroleum’s marketer members are "persons responsible" for assessment and remediation of sites identified by the Department as "confirmed" or "suspected" sources of contamination beyond the boundary of the facility (i.e., "off-site contamination"). In certain instances, the Department's rules allow for the use of No Further Action with Conditions procedures in cases of petroleum contamination where applicable regulatory requirements are met because the use of conditions, such as institutional and engineering controls, may be more cost- effective than active remediation. As of February 2005, the Department estimated that it had reports of approximately 23,000 petroleum-contaminated sites. In 2004, the Department received an estimated 539 Discharge Report Forms in connection with petroleum storage facilities. As of March 2005, the Department had information indicating that approximately 2,000 "off-site" properties have been affected by contamination. Assessment Reports filed with the Department indicate that a substantial number of these sites may have been affected by discharges of petroleum or petroleum products. Petroleum discharges will in all likelihood continue to occur in the future at petroleum facilities. Petroleum discharges will in all likelihood continue to affect off-site properties in the future.
Findings Of Fact The parties stipulated to the fact that James Baskin holds registered contractor's license number BC 0011300. Raskin's registered general contractor's license was issued by the Florida Construction Industry Licensing Board. Prior to the commencement of the hearing, the Hearing Officer held that the record of the proceedings for the Cape Coral Board could be filed as a late filed exhibit in this cause in order that the Florida Construction Industry Licensing Board could review the Cape Coral Board's action pursuant to its authority under Section 468.112(2)(f), Florida Statutes. Ambassador Homes contracted with Sam and Marie Franzella for the construction of a single family residence to be constructed on the property located on Lots 41-42, Block 1224, Cape Coral Unit 19, Section 32-33, Township 44 South, Range 24 East. Stucky Well Drilling was initially contacted by an unknown agent of Ambassador Homes on January 1, 1975, and directed to drill a well, and install a deep well jet pump and tank at the location stated above. On January 20, 1975, Marion, a secretary for Ambassador Homes, called Stucky Well Drilling and directed that Stucky Well Drilling install the well and equipment as soon as possible. On January 21, 1975, a 210 foot well was drilled on the property described above and on January 23, 1975, a Mr. Green from Ambassador Homes called and requested that the tank and equipment be installed immediately. Mr. Hall, an employee of Stucky Well Drilling, installed all the equipment as ordered on January 23, 1975. On January 24, 1975, a bill in the amount of Six Fifty Dollars ($650.00) was sent to Ambassador Homes for the work performed on the property described above. Ambassador Homes was a corporation engaging in residential contracting and operating under the license of James Raskin. Ambassador Homes did not pay Stucky Well Drilling the bill for the drilling of the well and installation of the equipment on the property described in paragraph 3 above. Subsequently Stucky Well Drilling brought suit against Ambassador Homes, Inc., in the County Court of Lee County and obtained final judgment in the amount of Six Hundred Fifty Dollars ($650.00) plus costs. This judgment was entered on December 2, 1975.
Recommendation Based on the foregoing findings of fact and conclusions of law, the Hearing Officer recommends that the Florida Construction Industry Licensing Board suspend the license of James Raskin as a registered general contractor until he presents satisfactory proof to the Board of his financial qualifications to engage in the contracting business. DONE and ORDERED this 27th day of May, 1977, in Tallahassee, Florida. STEPHEN F. DEAN Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304 (904) 488-9675 COPIES FURNISHED: Barry Sinoff, Esquire 1010 Blacks tone Building Jacksonville, Florida 32202 James Raskin 1810 S. E. 44th Street Cape Coral, Florida 33904 Mr. J. K. Linnan Executive Director Florida Construction Industry Licensing Board Post Office Box 8621 Jacksonville, Florida 32211
Findings Of Fact On August 6, 1981, an inspector employed by the Petitioner Department of Agriculture and Consumer Services took gasoline samples from "super lead free" and "lead free" pumps Identified as "Ben 2096" and "Ben 1693", respectively, at Barnett's Texaco Station, in Fort Meade, Florida. The samples were tested for suspicious substances and it was found that the "super lead free" had an octane level of 87.8. The sample from the "lead free" pump contained an octane level of 91.5. Based upon this information, the chemist noted that the "super lead free" and "lead free" gasolines were probably placed in the wrong pumps at the station. The "super lead free" sample was legal as "lead free" and the "lead free" sample had an octane which would qualify it as "super lead free." As a result of the test results, a stop-sale notice was issued by the Department against the "super lead free" pump. Since approximately 350 gallons of "lead free" regular was sold as "super unleaded", an assessment was made by the Department equal to retail value of the product sold to retail customers. Upon investigation, it was determined that the "super lead free" and "lead free" gasolines were not placed in the wrong pumps but rather an employee of Barnett's Texaco inadvertently placed the wrong panel indicator on the two adjacent pumps during a price change. The problem was quickly resolved and special precautionary procedures have been instituted to prevent this error from happening in the future. These procedures include a double check by different personnel each time a price change requires removal of panels. Additionally, Smith Brothers Oil Co., Inc., will double check the dealer to insure this procedure is followed. The facts set forth above are not in dispute. The only dispute between the parties 15 whether under the facts of this case the Respondent Smith Brothers Oil Co. Inc. will entitled to a return of all or part of its $490.
Recommendation Upon consideration of the foregoing, it is RECOMMENDED: That the Department enter a Final Order returning $245 to the Respondent. DONE and ORDERED this 14th day of April, 1982, in Tallahassee, Florida. SHARYN L. SMITH Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 14th day of April, 1982 COPIES FURNISHED: Robert A. Chastain, Esquire Doyle Conner, Commissioner General Counsel Department of Agriculture Department of Agriculture and Consumer Services and Consumer Services The Capitol Mayo Building, Room 513 Tallahassee, Florida 32301 Tallahassee, Florida 32301 Wallace W. Storey, Esquire 160 South Broadway Bartow, Florida 33830
Findings Of Fact Based upon the testimony of the witnesses and the documentary evidence received at the hearing, the following findings of fact are made: Jane, Rick and Eloise Waelti are the owners of all stock issued by Melbourne Sand Transport Company, Inc., the Petitioner in this case. Petitioner is, therefore, a private, family-owned entity and is one of four affiliated companies owned and managed by the Waelti family. Together, Jane and Eloise Waelti own 59 percent of the Petitioner's stock. Consequently, a majority of the Petitioner's stock is owned by women, a category of socially and economically disadvantaged individuals as described in Rule 14-78.002, Florida Administrative Code. Rick and Eloise Waelti, brother and sister, each own 41 percent of the Petitioner's stock. Jane, their mother, currently owns 18 percent of the stock. In 1962, Jane and Melvin Waelti moved their family to Brevard County, Florida and purchased Melbourne Sand Company. Over the years that enterprise grew and evolved into four related companies, all involved in the business of selling sand and aggregate, and the short and long range hauling of it. The companies are: Melbourne Sand Company, Inc. responsible for marketing and management; Melbourne Sand Transport Company, Inc. responsible for long range trucking; Melbourne Sand Supply Company responsible for short range trucking; and Melbourne Sand Mining Company, the entity that owns the physical plant and buildings from which all Waelti operations are run. After her husband Melvin's death in 1978, Jane Waelti became the majority stockholder in all Waelti family businesses. Jane Waelti has worked full and part-time in the businesses since 1965. Rick Waelti became president of Melbourne Sand Company at his father's death. Rick took charge of the operations side of the family businesses while Jane continued to handle office matters including personnel functions. Also at that time, Eloise Waelti was recruited to work in the businesses because of her prior banking experience. To that end, Eloise took over the fiscal responsibilities for the family businesses. Currently, responsibilities related to the day-to-day operations of the Petitioner have been delegated to nonowner employees of the company. For example, Petitioner employs a dispatcher who is responsible for assuring vehicles are dispatched to job locations as may be required. That individual also interviews and hires drivers for the company's trucks. Similarly, another nonowner employee solicits work for the company and prepares bids for submission on jobs. That employee also coordinates projects with the dispatcher so that jobs are completed in a timely manner. Rick, Eloise, and Jane Waelti are in the office to assure that all others are performing their respective jobs appropriately. Rick verifies the operations are being conducted correctly; Eloise serves as comptroller verifying funds are available for projects, acquisitions, or repairs; and Jane coordinates personnel and insurance concerns. Thus, decisions regarding problems affecting the Petitioner are dealt with by the Waeltis as a committee. They meet on an almost daily basis to resolve any policy or business decision collectively. For example, if a repair is needed in order to get a vehicle back in service, the trio will meet to decide the pros and cons of having the vehicle repaired. In 1990, the Petitioner applied for and received a Small Business Administration Loan in the amount of $800,000. To qualify for the loan, Jane Waelti pledged land valued at $1.6 million. Rick and Eloise also signed personally to guarantee the loan but did not provide collateral. This loan allowed the Petitioner to remain solvent and to keep control of its fleet of trucks. In 1991, Rick resigned as president of Petitioner and Eloise was selected to succeed him. Jane is tapering off her hours and responsibilities with the company as she is eligible for Social Security benefits which she wants to begin drawing. During 1990, Rick was state president of the Jaycees and was unavailable to supervise work for the Petitioner. During that time, Petitioner conducted business without hardship. Petitioner's nonowner employees, who Rick trained, have taken over many responsibilities for the company.
Recommendation Based on the foregoing, it is RECOMMENDED: That the Department of Transportation enter a final order denying the DBE certification requested by the Petitioner. DONE and ENTERED this 31stday of October, 1991, in Tallahassee, Leon County, Florida. JOYOUS D. PARRISH Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32301 (904)488-9675 Filed with the Clerk of the Division of Administrative Hearings this 31st day of October, 1991. APPENDIX TO CASE NO. 91-4787 RULINGS ON THE PROPOSED FINDINGS OF FACT SUBMITTED BY THE PETITIONER: Paragraphs 1 through 6 are accepted. To the extent that paragraph 7 states that Jane owned the majority of stock and, therefore, could "out vote" her children, paragraph 7 is accepted; otherwise, rejected as contrary to the weight of the evidence since it is clear Rick had the expertise necessary to keep his mother's business running smoothly. Paragraphs 8 and 9 are accepted. RULINGS ON THE PROPOSED FINDINGS OF FACT SUBMITTED BY THE RESPONDENT: Paragraphs 1 through 16 are accepted. Paragraph 17 is rejected as contrary to the weight of the evidence. Paragraphs 18 through 24 are accepted. Paragraph 25 is rejected as irrelevant. Paragraph 26 is accepted to the extent it finds Eloise has little expertise or experience in the operational areas of the Petitioner; otherwise rejected as argument. Paragraphs 27 through 29 are accepted. Paragraph 30 is accepted to the extent that it finds Rick has the operational expertise for the Petitioner; otherwise rejected as argument. Paragraphs 31 and 32 are accepted. Paragraph 33 is rejected as contrary to the weight of the evidence; however, such areas are critical but so are others-one would not operate without the other. Paragraphs 34 through 39 are accepted. Paragraph 40 is accepted but is irrelevant. Paragraph 41 is rejected as not supported by the weight of the evidence or argument. COPIES FURNISHED: Ben G. Watts, Secretary Department of Transportation ATTN: Eleanor F. Turner, M.S. 58 Haydon Burns Building 605 Suwannee Street Tallahassee, Florida 32399-0458 Thornton J. Williams General Counsel Department of Transportation 562 Haydon Burns Building Tallahassee, Florida 32399-0458 Pamela S. Leslie Deputy General Counsel Department of Transportation 605 Suwannee Street, M.S. 58 Tallahassee, Florida 32399-0458 Vincent G. Torpy, Jr. FRESE, FALLACE, NASH & TORPY, P.A. 930 S. Harbor City Boulevard, #505 Melbourne, Florida 32901
The Issue Whether or not the agency may, pursuant to Section 525.06, F.S. enter an assessment for sale of substandard product due to a violation of the petroleum inspection laws and also set off that amount against Respondent's bond.
Findings Of Fact Frank Hampton, d/b/a Hampton's Gulf Station, has operated at 2610 North Myrtle Avenue, Jacksonville, for many years and has had no prior complaints against it by the Petitioner. Respondent is in the business of selling kerosene, among other petroleum products. The facts in this case are largely undisputed. On November 28, 1990, Bill Ford, an inspector employed with the Department of Agriculture and Consumer Services, visited the Respondent's premises to conduct an inspection of the petroleum products being offered for sale to the public. Ford drew a sample of "1-K" kerosene being offered for sale, sealed it, and forwarded it to the agency laboratory in Tallahassee where John Anderson, under the supervision of Nancy Fischer, an agency chemist, tested it to determine whether the sample met agency standards. The testing revealed that the sampled kerosene contained .21% by weight of sulfur. This in excess of the percentage by weight permitted by Rule 5F- 2.001(2) F.A.C. for this product, but it would qualify as "2-K" kerosene. A "Stop Sale Notice" was issued, and on the date of that notice (November 30, 1990) the tank from which the test sample had been drawn contained 3887 gallons of product. It was determined from Respondent's records that 4392 gallons had been sold to the public since the last delivery of 5500 gallons on November 16, 1990. The product was sold at $1.58 per gallon. The calculated retail value of the product sold was determined to be in excess of $1,000.00, and the agency permitted the seller to post a bond for $1,000.00 (the maximum legal penalty/bond) on December 3, 1990. The assessment is reasonable and conforms to the amount of assessments imposed in similar cases. On this occasion, Respondent had purchased the kerosene in question from a supplier which is not its usual wholesale supplier. This was the first time Respondent had ever ordered from this supplier and it is possible there was some miscommunication in the order, but Respondent intended to order pure "1-K" kerosene. Respondent only purchased from this supplier due to the desperate need in the community for kerosene during the unusually cold weather that occurred during the fall of 1990. Respondent ordered "1-K" kerosene and believed that "1-K" had been delivered to it by the new wholesale supplier up until the agency inspector sampled Respondent's tank. After posting bond, Respondent originally intended to send the unused portion of "2-K" kerosene back to its supplier, but instead was granted permission by the agency to relabel the remaining product so that the label would correctly reflect that the product was "2-K." Respondent accordingly charged only the lesser rate appropriate to "2-K" kerosene for sale of the remaining 3887 gallons.
Recommendation Upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Agriculture and Cnsumer Services enter a final order approving the $1,000.00 maximum penalty and offsetting the bond against it. DONE and ENTERED this 20th day of June, 1991, at Tallahassee, Florida. ELLA JANE P. DAVIS, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 20th day of June, 1991. COPIES FURNISHED TO: FRANK HAMPTON HAMPTON VILLA APARTMENTS 3190 WEST EDGEWOOD AVENUE JACKSONVILLE, FL 32209 CLINTON COULTER, JR. ESQUIRE DEPARTMENT OF AGRICULTURE AND CONSUMER SERVICES (LEGAL) MAYO BUILDING, ROOM 510 TALLAHASSEE, FL 32399-0800 HONORABLE BOB CRAWFORD COMMISSIONER OF AGRICULTURE THE CAPITOL, PL-10 TALLAHASSEE, FL 32399-0810 RICHARD TRITSCHLER, GENERAL COUNSEL DEPARTMENT OF AGRICULTURE AND CONSUMER SERVICES 515 MAYO BUILDING TALLAHASSEE, FL 32399-0800
The Issue The issue presented for decision herein is whether or not Petitioner's Antiknock (octane) Index number of its petroleum product was below the Index number displayed on its dispensing pumps.
Findings Of Fact Based upon my observation of the witnesses and their demeanor while testifying, documentary evidence received, and the entire record compile herein, I make the following relevant factual finding. Rafael Ruiz is the owner/operator of Coral Way Mobil, an automobile gasoline station, situated at 3201 Coral Way in Coral Gables, Florida. Ruiz has operated that station in excess of ten (10) years. On or about May 13, 1987, Respondent, Department of Agriculture and Consumer Services, received a customer complaint alleging that the fuel obtained from Petitioner's station made her automobile engine ping. Respondent dispatched one of its petroleum inspectors to Petitioner's station at 3201 Coral Way on May 14, and obtained a sample of Respondent's unleaded gasoline. Inspector Bill Munoz obtained the sample and an analysis of the sample revealed that the produce had an octane rating of 86.9 octane, whereas the octane rating posted on the dispenser indicated that the octane rating of the product was 89 octane. On that date, May 14, 1987, Respondent issued a "stop sale notice" for all of the unleaded product which was determined to be 213 gallons. Petitioner was advised by Inspector Munoz that the unleaded produce should be held until he received further instructions from the Respondent respecting any proposed penalty. On May 15, 1987, Petitioner was advised by John Whittier, Chief, Bureau of Petroleum Inspection, Florida Department of Agriculture and Consumer Services, that the Antiknock Index number of the sampled product was 2.1 percent below the octane rating displayed on the dispenser and that an administrative fine would be levied in the amount of $200 based on the number of gallons multiplied times by the price at which the product was being sold, i.e., 213 gallons times 93.9 cents per gallon. Petitioner did not dispute Respondent's analysis of the product sample, but instead reported that he had been advised that three of the five tanks at his station were leaking and that this is the first incident that he was aware of wherein the product tested below the octane rating displayed on the dispenser.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is hereby RECOMMENDED: That the Respondent, Department of Agriculture and Consumer Services, enter a Final Order imposing an administrative fine in the amount of $200 payable by Petitioner to Respondent within thirty (30) days after entry of the Respondent's Final Order entered herein. RECOMMENDED this 7th day of October, 1987, in Tallahassee, Leon County, Florida. JAMES E. BRADWELL Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 7th day of October, 1987. COPIES FURNISHED: Rafael E. Ruiz c/o Coral Way Mobil 3201 Coral Way Miami, Florida 33145 Clinton H. Coulter, Jr., Esquire Senior Attorney Office of General Counsel Department of Agriculture and Consumer Services Room 514, Mayo Building Tallahassee, Florida 32399-0800 Honorable Doyle Conner Commissioner of Agriculture The Capitol Tallahassee, Florida 32399-0810 Robert Chastain, Esquire General Counsel Department of Agriculture, and Consumer Services Room 513, Mayo Building Tallahassee, Florida 2399-0800
The Issue The issue is whether Petitioner is liable for a penalty for failure to maintain workers’ compensation insurance in violation of relevant provisions in Chapter 440, Florida Statutes (2007).1
Findings Of Fact Respondent is the state agency responsible for enforcing the statutory requirement that employers secure the payment of workers’ compensation for the benefit of their employees. § 440.107. Petitioner is a limited liability company domiciled in Florida and engaged in the sale of stone countertops. The disputed issues of fact arise from a single, integrated transaction involving “one and the same business” within the meaning of Subsection 440.10(1)(b). The “business” includes a contractor, a wholesaler, and two subcontractors, one of which is Petitioner. The integrated transaction is between the business and a homeowner. The contractor is identified in the record as Manasota Land Development (Manasota). The homeowner owns a residence on Agate Road in Port Charlotte, Florida (the homeowner). The contractor referred the homeowner to Petitioner for the purpose of selecting granite countertops. Petitioner’s representative visited the residence, took measurements, and received the order for granite from the homeowner. Petitioner placed the order with the wholesaler, the name of which is not material to this proceeding. The wholesaler delivered granite to a fabricator and installer designated by Petitioner and identified in the record as Granite Exclusive (the installer). The installer fabricated the countertops and installed them at the residence. Petitioner visited the residence to ensure customer satisfaction, and Petitioner paid the wholesaler and installer from funds provided by Manasota. Petitioner did not collect payment from the homeowner. Rather, Petitioner agreed with Manasota to a total price of $7,141.00. Petitioner billed Manasota for $3,570.00, an amount equal to approximately one-half of the total agreed price, on May 21, 2008, inferentially when the homeowner placed the order with Petitioner. Manasota paid Petitioner the 50 percent deposit. Petitioner billed Manasota for the balance due, in the amount of $3,571.00, on July 22, 2008, when the work was completed to the satisfaction of the homeowner, and Manasota paid the balance due. Petitioner was a sales agent, order processor, and a collection and payment processor for Manasota. Petitioner paid the wholesaler and installer from funds provided by Manasota. The fact-finder draws a reasonable inference from the evidence that Manasota collected a sum from the homeowner that was equal to or greater than the price Manasota paid to Petitioner. Petitioner and the installer are subcontractors of Manasota. Petitioner had no supervisory control over the installer. Respondent’s claim that a written or oral contract existed between Petitioner and the wholesaler and installer is not supported by clear and convincing evidence. It is undisputed that neither the installer nor Petitioner have workers’ compensation insurance, and the two subcontractors are, by operation of Subsection 440.10(1)(b), the employees of Manasota in “one and the same business.” Manasota is responsible for providing workers’ compensation coverage by operation of the statute. Petitioner mistakenly believed, in goof faith, that it was exempt from the requirements of Chapter 440. A company officer of Petitioner obtained an exemption certificate and, reasonably, concluded that the exemption was for Petitioner and both of Petitioner’s officers or employees. Such an exemption was the officer’s stated purpose when she entered the local state office responsible for issuing exemption certificates. The state employee represented that the exemption certificate actually issued achieved the officer’s stated purpose. The express terms of the exemption certificate provide that the exemption is for the person “and” company named in the certificate. However, Subsection 440.05 makes clear that an exemption covers only the company officer named in the certificate and that each of the two officers must be named in the certificate or that each officer must obtain a separate certificate. Petitioner did not engage in the business of fabricating or installing the stone countertop. Petitioner made a sale of the granite countertop and placed an order with a wholesaler. The wholesaler shipped the countertop to a the installer designated by Petitioner based on proximity to the project site. The fabricator installed the countertop. Petitioner did not supervise the fabrication or installation of the countertop. The fact-finder has considered and weighed conflicts in the evidence pertaining to the issue of whether Petitioner engaged in the business of fabricating and installing the stone countertop and has resolved any evidential conflicts in favor of Petitioner. The testimony of Petitioner’s witness, describing the nature and scope of Petitioner’s business, is consistent with Article 5 in Petitioner’s Articles of Incorporation which states: The general purpose for which the Company is organized is to engage in the business of natural stone countertop sales. . . . On June 3, 2008, Respondent’s investigator, conducted a compliance check at 8206 Agate, South Gulf Cove, Florida, to verify compliance with the workers’ compensation statutes. At the worksite, Respondent’s investigator observed three men installing a stone countertop for the installer. Installation of stone countertops is part of the construction industry and is assigned Class Code 5348 in the Scopes Manual, published by the National Council on Compensation Insurance and adopted in Florida Administrative Code Rule 69L-6.021. The investigator interviewed the three men and requested proof of compliance with the workers’ compensation law. One of the three men, neither furnished proof of an election to be exempt from workers’ compensation nor showed that he had secured workers’ compensation coverage. Utilizing the Department of Financial Services’ Coverage and Compliance Automated System (CCAS), the investigator was unable to determine that the employee of the installer was exempt from the requirements of the workers’ compensation law or that Petitioner had secured the payment of workers’ compensation. On June 4, 2008, the investigator issued a Stop-Work Order and Order of Penalty Assessment against Petitioner for failure to meet the requirements of Chapter 440. Respondent ordered Petitioner to cease all business operations and assessed a $1,000.00 penalty against Petitioner pursuant to Subsection 440.107(7)(d). On June 4, 2008, the investigator issued a Division of Workers’ Compensation Request for Production of Business Records for Penalty Assessment Calculation. Petitioner complied with the Request and provided the required records. Based on Petitioner’s business records, the investigator issued an Amended Order of Penalty Assessment on June 11, 2008, in the amount of $1,218.52. Mr. Thomas Harvey, a company officer of Petitioner, did not posses an election to be exempt from workers’ compensation. Ms. Leslie Lockett, the other company officer had applied for and obtained an exemption from workers’ compensation coverage. Ms. Lockett’s exemption from workers’ compensation lists the scope of business or trade as countertops, pursuant to instructions from the agency employee who issued the certificate. Ms. Lockett’s exemption from workers’ compensation is a construction industry exemption. Ms. Lockett applied for a Notice of Election to be Exempt as a member of a limited liability company in the construction industry pursuant to the instructions previously described. In the transaction at issue in this proceeding, Petitioner collected payment for materials and installation of a stone countertop from Manasota. Petitioner did not collect payment from the homeowner and had no control or authority over either the wholesaler or the installer.
Recommendation Based on the Findings of Fact and Conclusions of Law, it is RECOMMENDED that Respondent issue a final order dismissing the Stop-Work Order and Amended Order of Penalty Assessment against Petitioner and Mr. Harvey. DONE AND ENTERED this 24th day of October, 2008, in Tallahassee, Leon County, Florida. S DANIEL MANRY Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 24th day of October, 2008.
